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Russia Gets Foothold In The World’s Hottest NatGas Discovery

Russia

Chinese E&P major Sinopec reportedly put its Argentina assets up for a $1 billion sale this week. With one of the interested buyers said to be Russia’s Rosneft. 

And that latter firm made ever bigger waves in the global natural gas industry this week. With the purchase of a stake in one of the largest — and most geopolitically complicated — development projects in the world. 

That’s the Zohr natgas field, offshore Egypt. A find made by Italian major Eni — which holds a massive reserve of 30 trillion cubic feet of natural gas. 

Eni announced this week it is selling a 30 percent interest in Zohr to Rosneft. With the Russian firm paying $1.125 billion for the stake, and reimbursing Eni for a proportionate share of historic costs. 

That will now give Rosneft a foothold in one of the world’s most important emerging natgas areas: the eastern Mediterranean. A place where recent massive discoveries in Egypt and Israel, and high-profile exploration activity in places like Cyprus, have brought the region to the forefront of the global energy scene. 

Taking a role in this emerging hotspot is exactly what Rosneft is looking for. With the company’s CEO Igor Sechin noting he expects the deal to “strengthen positions of Rosneft in the strategic markets of Europe and Middle East”. Related: Oil Giants At Odds As Saudi, Russian Ties Improve

Gaining influence in this key region would continue a major expansionary campaign by Rosneft of late. With the major also having expanded into India, and forged business ties with China over the last few months. 

All of which shows that the firm — and perhaps Russia in general — is intent on playing a larger role in the global energy order. And even new U.S. sanctions aren’t deterring them, with the 30 percent Zohr stake coming in under the 33 percent ownership threshold that might trigger trade action. 

Watch for more deals coming from Rosneft (perhaps on the Sinopec Argentina assets) — which would cement the company as one of the biggest driving forces in the oil and gas world right now. 

Here’s to going all in.

By Dave Forest

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